In this Section:LIFE

Advisors And Technology: Crossroads Of A New Frontier

It’s a very different world than it was 20 years ago. That’s true in every market and every industry — insurance is no exception. I’ve seen a lot of change over the course of my career. For some time now, consumers have been demanding the same convenience and accessibility from insurers as they get from the Amazons of the world, but the responses to those demands have fallen short.

It’s not for lack of trying. Insurance carriers have put a lot of effort into streamlining the buying experience by expediting underwriting, but that alone is not enough. Success today requires more than just being efficient and offering a few digital portals. A website or app alone isn’t what’s going to catapult a company into the modern age. What’s needed is a reinvention.

“Simply hooking digital assets on to an analog business model does not make a digital business,” says the McKinsey study “Digital Disruption In Insurance: Cutting Through The Noise.”

Before I delve into the infrastructure that allows a carrier to transform its business model and offer what consumers demand, I want to spend some time talking about the reason for the change. What’s so egregious about engaging with the majority of insurance companies compared with banks, for example, is that the focus still faces inward. Offerings bubble up from a place of current capabilities and margins of profitability. Companies are still looking at the solutions they create through the lens of what they’re able to offer and what makes sense for them financially.

Although a company must be profitable in order to succeed, profit can’t be the only concern. Instead of taking an inside-out view, it’s time to look from the outside in, meaning from the consumer’s standpoint. True customer centricity can’t exist until the effort is made to understand what customers actually want and need — and that applies to everyone in the supply chain.

Here are a few elements of customer centricity that I believe are important.

Transparency

If you look at the insurance-buying process from a customer’s perspective, it’s hardly transparent. People don’t understand how insurance is priced — why it might cost more for one person than it does for another when buying the same type of policy.

Consumers often don’t understand how mortality rates factor in and why the underwriting process is so long and confusing. And they certainly don’t understand why different carriers follow different underwriting guidelines. But perhaps most important, they aren’t aware of the full value proposition: that life insurance takes a big risk factor off the table, that the return on investment is high, and that life insurance provides benefits beyond making sure their family is taken care of.

Ease of Use

In the digital age, it’s no longer acceptable to force consumers into an offline experience. Consumers make the majority of their buying decisions online, and they want the ability to browse products and organize their financial lives online. But just because they’re doing more online and don’t necessarily want to involve the advisor at the onset doesn’t mean that the advisor is removed from the process altogether. On the contrary, with the overwhelming amount of information available, it’s more important than ever to have an expert to decipher product features and intrinsic benefits.

Advisors are also best at customizing the experience and helping clients determine the solutions that make the most sense for their unique situation. What changes is that customers have the ability to do some things on their own and then engage an advisor when and how they want.

Another part of making things easy is creating a connected journey — the same experience from the carrier down through the advisor. It shouldn’t be confusing who they need to call if there’s an issue with the product. And in my opinion, that contact shouldn’t be the carrier.

Let’s consider Amazon again. If there’s a problem with something you purchased on the Amazon platform, you call Amazon directly. You don’t call the product manufacturer or even the third-party seller. So why should it be different for insurance?

Value Add

What you offer must improve the consumer’s life in some way — and it needs to be different from what others are offering. I’m not talking about policy benefits or nominal price differences. I’m not talking about scrubbing apps or spreadsheeting — that isn’t what’s going to make you stand out. I’m talking about the experience.

An example could be offering elements of products a la carte so that customers are getting precisely what they want and not a bunch of bloat that does nothing but increase the cost. Customizing solutions for an individual is an attractive value proposition for carriers, distributors and advisors to consider. It requires some creativity and flexibility, but it’s an appealing proposition.

Customization could also come in the form of innovation, offering new services based on the data you collect. For example, a carrier might consider partnering with software providers to include prevention services and insurance that’s integrated into the software.

Infrastructure

Now, let’s talk about the infrastructure it takes to deliver that customer centricity. Integrated platforms have fundamentally changed consumers’ expectations. They provide the instant gratification and ease of use that consumers seek.

“No longer do customers have to contend with what, from their perspective, are slow and frustrating processes defined by a carrier’s internal functional silos and technical limitations,” said the McKinsey & Co. study “Capturing Value From the Core.”

“Instead, digital technology and the redesign of customer journeys can help them to move quickly and seamlessly across channels and touchpoints, and deliver personalized communications.”

Platforms can provide a dashboard of an entire environment — a holistic view of everything. We’re seeing environments or ecosystems form as we figure out new ways to do business. An ecosystem is where companies from different industries work together as part of a community.

In the McKinsey study mentioned previously, the connected car is one such example. Producing a connected car requires players from all types of market sectors: automakers, telecom companies, sensor and chip manufacturers, digital platforms (such as Uber), academic institutions, and insurers. Instead of operating in silos with limited touchpoints, they’re interacting to provide a complete experience.

It sounds like a great idea, but how do you get there from the way you are doing business now?

Start by asking yourself a few questions. What value will you provide your clients, and how will it be different from what your counterparts are offering? Next, how do you go about building capabilities — IT that can connect your data with insights from others who might be part of your ecosystem?

If that’s not something you can accomplish on your own, it may be necessary to partner with a third party that offers such technological advantages. This is a different partnership than you’d have with others in your ecosystem — it’s a closer one that’s focused on helping you deliver more flexibility, more customization, and a better, more intuitive experience.

The last question you should ask yourself is, can you move quickly enough? If the ecosystems I just described become the new way of doing business, there will be room for only one representative of each market, and those who seize the opportunity first will persevere. Piggybacking on a partner who has a robust, state-of-the-art platform already built could get you there faster. In today’s industry, speed to execution is worth its weight in gold.

The bottom line is that customer centricity and customer experience far outweigh factors such as price and even reputation when it comes time for the consumer — or an ecosystem of experience partners — to decide who to work with.

Michael Babikian is founder and CEO of LegacyShield. He may be contacted at [email protected]